Russia’s Bitcoin mining industry is set to see significant growth in 2024, with the number of mining farms increasing by 7% to 136,600. However, this expansion comes with significant challenges related to energy consumption and unregulated mining operations.

Growth and Energy Challenges
According to a report released on February 21, Russia’s Bitcoin mining industry continues to grow strongly, but the increase in the number of mining farms is accompanied by serious energy consumption issues. Unregulated mining operations remain widespread, contributing to worsening energy shortages and making government oversight difficult.

Despite Russia's efforts to clamp down on illegal mining, many farms remain unregistered, putting a strain on the national grid.

Russia's Bitcoin Mining Capacity Hits 11 GW
A report from Kommersant indicates that Irkutsk is Russia's largest Bitcoin mining hub, accounting for more than 10% of all farms. Meanwhile, the Moscow region and its environs account for about 17%, while Bashkiria and Samara remain important players in the cryptocurrency mining industry.

The total mining capacity of Bitcoin farms in Russia is currently 11 GW, but only 3 GW is used by legal miners. This shows that the level of unregulated mining is still very large, exposing the industry to many legal risks and negatively affecting the national energy system.

Financial losses from illegal mining
Illegal mining is taking a heavy toll on Russia’s Rosseti power grid, with losses of more than 1.3 billion rubles ($14.2 million) in 2024 alone.

The North Caucasus region has been hit hardest, with Rosseti Severny Kavkaz reporting losses of more than 600 million rubles ($6.5 million). Novosibirsk recorded losses of 400 million rubles ($4.4 million), while Rosseti Center and Privolzhye reported losses of 120 million rubles.

The company also said it had detected and processed 130 cases of illegal electricity use, of which more than 40 criminal cases had been opened under Russian law.

Russian Government Tightens Control Over Bitcoin Mining
To curb illegal mining, the Russian government has issued new regulations to control the industry. A new decree completely bans Bitcoin mining in 11 regions, effective from January 2025.

In addition, some regions such as Buryatia, Irkutsk and Zabaikalsky Krai will be restricted from mining during the fall-winter season when electricity demand increases.

The Russian Ministry of Energy also proposed the creation of a national registry to track cryptocurrency mining rigs, in order to strengthen supervision, reduce energy losses and bring more mining activities under the legal framework.

Russia may build dedicated power plants for Bitcoin mining
One of the solutions being considered is to build dedicated power plants to serve Bitcoin mining activities. Aisen Nikolaev, Chairman of the State Council's Energy Committee, suggested that the establishment of separate power generation facilities could help stabilize the power supply while keeping the Bitcoin mining industry within the legal framework.

Nikolaev stressed that in some regions, mining has gone out of control, exacerbating power shortages and affecting the overall quality of power supply. If Russia implements this plan, it could be a major turning point for the cryptocurrency mining industry, helping to strengthen energy management and strengthen Russia's position in the global market.

Bitcoin Continues to Maintain Strong Price Momentum
While Russia's Bitcoin mining industry continues to face policy changes, the Bitcoin price has maintained impressive growth momentum. Currently, Bitcoin is trading at $98,716, up 1.54% over the past 24 hours, holding the important $98,000 mark.

This price increase was driven by a number of factors, including improved US-Russia diplomatic relations and the more open stance of the US Securities and Exchange Commission (SEC) towards the cryptocurrency market.

In addition, the recent approval of a new stablecoin by the SEC and the launch of the Emerging Technologies and Cybersecurity Unit to protect retail investors also contributed to the bullish sentiment in the market.

Conclusion
The Russian Bitcoin mining industry is undergoing a period of strong expansion but also faces many major challenges. The Russian government is strengthening controls to curb illegal mining activities, while also looking for sustainable solutions such as building dedicated power plants.

In this context, the development of Bitcoin and the regulatory policies of countries will continue to be important factors shaping the future of the cryptocurrency mining industry in Russia.